Trend v Range-Bound Systems
This article elaborates on the one dated August 7, 2006 entitled “The Ideal Trading System”.
Today’s article is about the “performance in different market conditions” feature.
Some systems work ONLY in trending markets. Too bad, because the market spends only 30% or less of the time in a trend. Seventy percent of the time, the market is going sideways with no trend.
Some systems work ONLY in sideway choppy range-bound markets. That’s when prices bounce between the same high price and the same low price for a long time.
This has an impact on the other features of the ideal system such as frequency of trading and income frequency. If the market trends only 30% of the time, then a system that works in a trending market might pay only 30% of the time too.
Today’s article is about the “performance in different market conditions” feature.
Some systems work ONLY in trending markets. Too bad, because the market spends only 30% or less of the time in a trend. Seventy percent of the time, the market is going sideways with no trend.
Some systems work ONLY in sideway choppy range-bound markets. That’s when prices bounce between the same high price and the same low price for a long time.
This has an impact on the other features of the ideal system such as frequency of trading and income frequency. If the market trends only 30% of the time, then a system that works in a trending market might pay only 30% of the time too.
posted by Raymond T. Lee (See Disclaimer at bottom) at 11:00 AM
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